Can anyone give me advice on a 2/28 mortgage loan?

I have a chapter 7 bankruptcy discharged 2 years ago. My husband and i both have good jobs, (he a school teacher and me in insurance). We are wanting to purchase a home and the only option we are getting is this 2/28. of course the loan officer is advising us this will be fine to refinance in 2 years.. Has anyone had an experience with this. We are kinda freaked out and don't want to get overwhelmed financially again

As a branch manager for a direct lender/brokerage, I would stay away from the 2/28 at this time. We may have more rate hikes, hindering you from refinancing in 2 years due to whats called payment shock! It is a risky loan at this time as nobody knows if rates will decrease. You will be fine to refinance in 2 years; at the going rate at that time.. The 2 year fixed is a way for that loan officer to earn income off of you two times. It may not be the best program for you after seeing your hesitance. Email me at ryan.wood@truelend.com for other options.

With 2/28 ARMs, your interest rate is fixed for the first two years after the note date (the number before the slash refers to the number of years that the initial rate is fixed), after which the interest rate can change every year to the index value plus the margin (subject to the interest rate caps).

These programs (often called "B paper loans") are primarily offered for borrowers with less-than-perfect credit who don't qualify for an "A paper loan". They allow you two years to rebuild your credit, at which point you may refinance at a better rate. 2/28 ARM loans offer an initial higher interest rate than the fully indexed rate (index plus margin) during the initial period of the loan and usually have a two year prepayment penalty.

http://mortgage-x.com/library/2_28_loan.asp

If your husband has decent credit, you might be better off financing in his name alone. You can put both of your names on the house title. It will limit how much you can qualify for, but usually they will loan you far more money than you can afford to pay.

i am mortgage broker as well i would be happy to look over your situation to see if it is a good deal for you. As it stands rite now i do not have enough information to say. I am not triing to get your business i just want to help you can email me a nanu569@yahoo.com or on aim nanu596

please take me up on this most people on here will not have the best advice

www.naca.com check them out. they are a non-profit housing advocacy group that offers their own mortgage programs. They got their money from taking on Fleet Bank for predatory lending, and they won. Now they use that settlement money to help people own their own homes.

You are smart to be wary of "creative" financing. Insist on seeing everything in writing, including the contract that supposedly doesn't have a prepayment penalty if you refinance. A lot of mortgages do have a penalty.

Also-- many places are starting to offer programs for teachers to purchase homes. Check with your local school board and see if your husband is eligible for any of those if your district has them. Good luck!

I would recommend that you source out a state bond program. Most states offer this program for first time home buyers, however the interest rate are lower than your normal FNMA and FHA rates. It's a 30yr fixed program, and you will pay MI on it, however if you do a cost analysis, your payments might be better off with a MI option. Secondly you can request the MI to be removed in a few years, and reduce your payment with out refinancing. Most Realtors dislike them, because they don't understand them, and mortgage brokers hate them, because they can't milk the client. Look into it, contact me if you have any questions.

Find a new lender. try on-line services like Lending Tree etc. Don't ever take just one persons advice or opinion. Good luck.

refinancing in 2 years will probably REALLY suck...

Interest rates will be going up in the coming years and you could set yourself up for another round of bankruptcy

You REALLY need to talk to some more mortgage brokers. And don't go around paying fees for them to pull your credit report at each place. Pull your own, all three bureaus, and take it with you. They will eventually have to pull them but for "just walked in the door preliminary conversation purposes," your own will do just fine. Also take a set of all your bankruptcy papers, including the filing, all schedules, and the discharge. Don't give them the original set just let them make a copy if they want one.

If you have established new lines of credit and kept them clean for at least 12 months you should be able to get a normal 30 year fixed. I've been out of the mortgage business for a couple of years, but for the 10 years I was in it I did loans for people in that situation regularly. Usually FHA. They can be very forgiving and the rate is usually only about a point higher that FNMA.

With FHA the rules were basically if you had been Discharged for 24 months and had established 2 or 3 lines of credit that you had kept perfect for the last 12 consecutive months minimum, you got the deal if you otherwise qualified (debt to income ratios, time on your job or in your profession,etc.)

If you have not established (or carried over) any clean lines of credit you should do that immediately and save your money for another year while they mature. The easiest way is to go to www.cardweb.com/cardtrak then click on "find a card", then click on "Secured" and you will see a list of secured cards in a comparison chart so you can find 3 Good Deals. Most of the stuff you get in the mail is not in that category. A reasonable annual fee is ok but any type of Application Fee or Account maint. fee etc is nothing but junk, rip you off fees.

If you are setting up new accounts as soon as you get the card activate the account, lock the card up, and pay off any balance on the card (the annual fee is usually charged on the first statement.) The LEAVE IT ALONE.

The way interest rates have been trending upward for a good while now, I would be very uncomfortable about getting locked into a variable/adjustable rate mortgage. They can be dangerous to your financial health. If it were me, I would go Fixed Rate or nothing.

If rates improve in the future you can still do a refinance to a lower Fixed Rate Loan as long as you have continued to keep your credit "perfect." When you have a Chapter 7 on your credit report you are not allowed anymore mistakes by most people in the credit world. So Perfect is the way you Really need to stay. On Time--Every Time. By the way, the best way to keep a credit line perfect is to have it paid down to ZERO and keep it that way. If you have any credit cards lock them up in a safe deposit box at the bank, then hide the key to the box. Outside of your home and if necessary a car--NO CREDIT SPENDING!

Run from this product. Also - avoid mortgage brokers and seek out a professional mortgage banker to best structure your options!

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